**Exhibit 10.3**

**EXPEDITED TREATMENT REQUESTED**

**UNITEDSTATES OF AMERICA**

**BEFORETHE**

**FEDERAL ENERGY REGULATORY COMMISSION**
|                                          | **)** |                    |
|------------------------------------------|-------|-------------------------|
| **Enbridge Energy, Limited Partnership** | **)** | **Docket No. OR06-___** |
| ** **                               | **)** |                    |

 

**OFFER OF SETTLEMENT**

Pursuant to 18 C.F.R. § 385.602 (2005), Enbridge Energy, LimitedPartnership (“Enbridge Energy”), a common carrier oil pipeline regulated by theCommission, hereby submits this Offer of Settlement to supplement theFacilities Surcharge approved by the Commission in *EnbridgeEnergy, Limited Partnership*, 107 FERC ¶ 61,336 (June 30, 2004) (“*Facilities Surcharge Order*”).  With the support of the Canadian Associationof Petroleum Producers (“CAPP”), an association that represents the producersof virtually all of the crude petroleum transported by Enbridge Energy,1 the settling parties seekCommission approval to implement an additional component of the FacilitiesSurcharge to permit recovery by Enbridge Energy of the costs of a plannedexpansion of its mainline capacity (the “Southern Access Mainline Expansion”).

In the *Facilities Surcharge Order*, theCommission approved the framework settlement that established the FacilitiesSurcharge as a component of Enbridge Energy’s U.S. tariff rates.  The basic concept underlying the Facilities Surchargeis to provide a flexible mechanism for Enbridge Energy to respond to shipperrequests for enhancements or modifications to the

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1 CAPP producer members account for more than 98percent of Canada’s oil and gas production. Approximately 97 percent of the crude petroleum transported on theEnbridge System originates in Canada.

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pipelinesystem, greater variety in the types of crudes handled, and increased access byshippers to particular markets or crude types. As negotiated with CAPP, the Facilities Surcharge permits EnbridgeEnergy to recover the costs associated with particular shipper-requestedprojects through an incremental surcharge layered on top of its existing baserates and other Commission-approved surcharges already in effect.

This Offer of Settlement contains the fifth specific agreementsubmitted under the Facilities Surcharge framework.2 This new agreement relates to the MainlineExpansion portion of the planned Southern Access Program (which is described inmore detail below and in Exhibit I hereto). A copy of the CAPP letter memorializing the Southern Access MainlineExpansion settlement is attached hereto as Exhibit II.

As the Commission is aware from prior proceedings, Enbridge Energyoperates the U.S. portion of the Enbridge System, which is a major crude oilpipeline system providing transportation of Western Canadian oil to the U.S.Midwest and points in Eastern Canada and New York State.3  The Canadian portion of theEnbridge System is operated by Enbridge Pipelines Inc. (“EPI”) and is regulatedby the National Energy Board (“NEB”) in Canada. The U.S. portion, which is commonly referred to as the “LakeheadSystem,” is operated by Enbridge Energy subject to this Commission’sjurisdiction.  This Offer of Settlementpertains solely to the Lakehead System, and in particular to the recovery ofcosts associated with the expansion of

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2 Thefirst four agreements were submitted contemporaneously with the original Offerof Settlement establishing the Facilities Surcharge framework.

3 A map of the Enbridge System, depicting thevarious components of the System including the planned Mainline Expansion, isattached hereto as Exhibit IV.

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mainlinecapacity on that system.4  Byway of background, the discussion below will describe the overall SouthernAccess Program, which involves a coordinated expansion of capacity on theEnbridge System to accommodate a projected major increase in production fromthe oil sands resources in Western Canada.

**REQUEST FOR EXPEDITED TREATMENT**

This Offer of Settlement is being filed now, in advance of a ratefiling or litigated proceeding, in order to give public notice of the additionof the Southern Access Mainline Expansion component to the Facilities Surchargeand to request approval to implement the new component when the Southern AccessMainline Expansion facilities are placed in service.  Enbridge Energy respectfully requests thatthe Commission provide expedited treatment of this Offer of Settlement to theextent consistent with the Commission’s rules and policies.  The total cost of the U.S. portion of theMainline Expansion is estimated to be approximately $887 million (in 2005 U.S.dollars).  Although Enbridge Energy hasalready begun to incur some of the preliminary planning and engineering costsfor this project, it will need to begin making irreversible contractualcommitments for major capital items such as acquisition of pipe as early as theend of the first quarter of 2006. Enbridge Energy will not be able to make those capital commitments in atimely manner if it does not have reasonable assurance that the tariffsurcharge mechanism set forth in this Offer of Settlement will be accepted bythe Commission.  Any deferral of thosecommitments threatens to delay the projected in-service date of the expansionand thereby create unavoidable bottlenecks that may hamper access of increasedCanadian crude

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4 EPIwill be making an application to the NEB with respect to approval of theCanadian aspects of this project.  

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suppliesto the U.S. Midwest market.  Therefore,Enbridge Energy requests that the Commission act on this Offer of Settlement assoon as possible, but in any event by March 15, 2006.

**ISSUE STATEMENT**

Whether the Commission should accept this Offer of Settlement betweenEnbridge Energy and CAPP in accordance with 18 C.F.R. § 385.602 (2005).

**EXPLANATORY STATEMENT**

# **I.****                                        ****Overview of Facilities SurchargeFramework**

The Facilities Surcharge, as approved by the Commission in the *Facilities Surcharge Order*, allows Enbridge Energy torecover the costs associated with particular shipper-requested projects throughan incremental surcharge layered on top of the existing base rates and otherCommission-approved surcharges already in effect.  The Facilities Surcharge is intended to be atransparent, cost-of-service-based tariff mechanism that will be trued-up eachyear to actual costs and throughput and that will therefore not be subject toadjustment either upwards or downwards under indexing.  *Id.* P 2.

The particular projects to be included are determined as the result ofa negotiating process between Enbridge Energy and CAPP.  At the time of the establishment of theFacilities Surcharge, Enbridge Energy and CAPP had identified four specificprojects for inclusion in the original surcharge.5  *Id.* P 3.  However, the Facilities Surcharge frameworkwas expressly designed to be open-ended, and the Commission accepted EnbridgeEnergy’s proposal “to submit for Commission review and approval futureagreements resulting from negotiations with CAPP where the parties have agreedthat recovery of costs through the Facilities Surcharge is

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5 Thefirst four projects were:  (1) theGriffith Hartsdale Transfer Lines; (2) the Hartsdale Tank Charge; (3) theSuperior Manifold Modification Project; and (4) the Line 17 Expansion Project.

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desirableand appropriate.”  *Id.*P 1.  Thus, this supplemental Offer ofSettlement is consistent with the intent of the Facilities Surcharge frameworkas previously approved by the Commission.

# **II.****                                    ****The Southern Access MainlineExpansion**

As noted above, the proposed expansion of the Lakehead System in theU.S. is a significant part of a larger project known as the Southern AccessProgram.  This section will describe theoverall Southern Access Program in order to provide the Commission a contextfor the U.S. portion of the Mainline Expansion, which is the subject of thisOffer of Settlement.  This information isintended to aid the Commission in understanding the systemwide benefits of theU.S. portion of the Mainline Expansion and should not be read to suggest thatthe Commission is being asked to determine any regulatory issues relating tothe Canadian portion of this expansion project.

Based on the substantial capital investment currently being made in newfacilities to develop Western Canada’s abundant oil sands resources, as well asthe continuing development of Canadian heavy oil reserves, Enbridge Energyanticipates a major increase in the supply of Canadian crude oil available forexport to U.S. markets.6  TheSouthern Access Program is prompted in large part by the projected need forsignificant infrastructure expansion in coming years to transport the expectedsurge in Canadian crude oil imports to the U.S. (offsetting supplies otherwiserequired from more volatile sources overseas).

The Southern Access Program as a whole involves a coordinated capacityexpansion and potential extension of the Enbridge System from Hardisty, Albertato points in the U.S. Midwest.

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6 TheCommission has previously taken notice of this “expected significant increasein Western Canadian crude oil production over the next decade” and theassociated benefits to domestic refiners of having access to this source ofrefinery feedstock to offset declining domestic crude oil production in theMid-Continent area.  *EnbridgeEnergy Co., Inc.*, 110 FERC ¶ 61,211 at P 2 (2005).

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TheMainline Expansion portion of Southern Access will occur both in Canada and theU.S.  Specifically, when the project iscompleted, EPI will be able to transport an additional 400,000 barrels per day(b/d) between Hardisty, Alberta, and the international border near Neche, NorthDakota.  Similarly, Enbridge Energy willbe able to transport an additional 400,000 b/d from the international border tothe Chicago area (and points south).7  Further information regarding theU.S.-portion of the Southern Access Program can be found in Exhibit I****hereto.

The first stage of the U.S. portion of the Mainline Expansion isexpected to add 44,000 b/d of capacity in 2007 and up to an additional 146,000b/d by early 2008.  The first stageincludes 321 miles of new 30-inch pipeline between Superior and Delavan,Wisconsin, along with pump station enhancements upstream and downstream of thissegment.  The cost of the first stage isprojected to be approximately $499 million for the U.S. portion and $43 millionfor the Canadian portion.8  The expansion project’s second stage will addadditional upstream pumping capacity and a new 133-mile pipeline segment fromDelavan to Flanagan, Illinois, with completion expected in early 2009.  The second stage costs are estimated to beapproximately $388 million for the U.S. portion and $92 million for theCanadian portion.  The schematic attachedhereto as Exhibit V shows the planned stages of the expansion project.

At Flanagan, the new line segment will interconnect with the SpearheadPipeline, which is currently being reversed to provide crude oil transportationservice from Chicago to Cushing,

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7 Anadditional aspect of the Southern Access Program is a possible extension ofservice on the Lakehead System to Wood River or Patoka, Illinois (the “MainlineExtension”).  Because the MainlineExtension phase of the Program is still under development, it is not includedin this Offer of Settlement and will not be addressed further herein.   

8 Alldollar figures in this pleading are in 2005 U.S. dollars unless otherwisespecified.

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Illinois.9  Once the Southern AccessMainline Expansion is complete to Flanagan, the portion of the SpearheadPipeline northeast of Flanagan will be re-reversed to provide access forCanadian production to Chicago via Flanagan.10  The downstream portion of Spearhead willcontinue to provide access to the trading hub at Cushing.

Completion of the total Southern Access Mainline Expansion will createa new 454-mile pipeline with approximately 400,000 b/d of incrementalcapacity.  This new pipeline willsubstantially increase the capability of the Lakehead System to transportCanadian crude oil production to Chicago, Cushing and other points in theMidwest, avoiding what will otherwise be a bottleneck that would significantlyinhibit the access of Canadian crude to these important markets.  As noted earlier, the total cost of the U.S.portion of the expansion is currently estimated to be approximately $887million.

# **III.****                                ****The Mainline Expansion:  Benefits To Shippers And The ProposedSurcharge Arrangement**

The principal benefit of the Mainline Expansion will be increasedcapacity.  As noted above, a significantbottleneck is forecast to occur in the Enbridge System in the near future ifmainline capacity is not increased.  TheSouthern Access Mainline Expansion will benefit all shippers by offeringsufficient capacity to relieve bottlenecks and avoid projected apportionment ofscarce capacity.  Enbridge Energy expectsthat the U.S. portion of the Mainline Expansion will result in approximately400,000 b/d of incremental capacity when the project is completed.

Among the other significant benefits of the Mainline Expansion are:

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9 *See Enbridge Energy Co., Inc.,*110 FERC ¶ 61,211 (2005).

10 Enbridge Energy has committed to provideservice to Chicago via the Southern Access Mainline Expansion line to Flanaganat the same total tariff rate at which service to Chicago is available on theexisting Lakehead System, so that shippers will be economically indifferent towhich specific line segment is used to transport their oil to Chicago. 

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·                  An expected reduction inthe tariff rates paid by shippers for transportation on the Canadian portion ofthe Enbridge System.  Because of theincreased volumes made possible by the expansion, and the interaction of thoseincreased volumes with the incentive tolling mechanism that applies to EPI’sCanadian tariff rates, heavy petroleum shippers on the Enbridge System will seetheir Canadian rates decline by an estimated $0.09 per barrel when theexpansion is fully in service and fully utilized.  The result is that the net change in thetotal rate for heavy service from Western Canada (Hardisty) to Chicago will bea modest overall increase of approximately $0.13 per barrel (with smallerincreases for light crude types);

·                  addition of the firstincrement of new Lakehead capacity at no capital cost to the shippers.  Enbridge Energy will add a new pump stationat Shorewood and related enhancements to Line 6A to create up to 44,000 b/d ofnew capacity by 2007 without including a return on or return of the capitalinvested in those assets in the surcharge;

·                  increased supply flexibility in the GreatLakes area and beyond, benefiting regional refineries and consumers duringtight supply situations;

·                  improved product quality due to greaterseparation among different crude types; and

·                  reduced transit times along the entiresystem.  For example, at Chicago, thedelivery time improvement for heavy barrels using Line 4 is expected to beapproximately 4 days, a 19% reduction when the expansion facilities are fullyutilized.

Because the Mainline Expansion will enhance service to all shippers,Enbridge Energy and CAPP have agreed that the cost associated with theexpansion should be borne by shippers to all delivery points on the LakeheadSystem in accordance with Enbridge Energy’s existing distance-based ratedesign.  This pricing mechanism isconsistent with Commission precedent for oil pipelines.  *See, e.g., SFPP, L.P.*,104 FERC ¶ 61,163 at P 10-11 (2003).  Asa common carrier, Enbridge Energy is projected to experience capacityconstraints in the U.S. portion of its system that will affect shippers acrossthe board.  The Southern Access MainlineExpansion will help relieve this constraint, thereby providing benefits to thesystem as a whole.  Accordingly, CAPP andEnbridge Energy have agreed to a surcharge component that will apply across thesystem so that all shippers pay in accordance with their usage of the system.

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The specific terms of the surcharge calculation are set forth inExhibit III attached hereto.  In general,Enbridge Energy will recover the cost of service of the U.S. portion of theSouthern Access Mainline Expansion through a surcharge, which will be includedin the Facilities Surcharge added to the indexed base rates and other existingsurcharges currently in effect for Enbridge Energy.  The surcharge will be calculated on a cost ofservice basis and trued-up annually in the same manner as the existing surchargesunder the Facilities Surcharge framework. In particular, Enbridge Energy will file the new surcharge at such timeas the first Mainline Expansion facilities go into service, based on anestimate of the first year’s projected costs and throughput volumes.  Thereafter, on April 1 of each succeedingyear, Enbridge Energy will adjust the surcharge to true-up the prior year’scosts and throughput volumes to actual data and to reflect the projected costsand throughput volumes for the then-current year.  The surcharge will remain in effect for theprojected depreciable life of the new facilities (30 years).

Asset forth in Exhibit III, the terms of the cost-of-service calculationsupporting the surcharge have been stipulated between CAPP and Enbridge Energyas follows.  Enbridge Energy will use theCommission’s Opinion No. 154-B methodology, but employing a stipulated capitalstructure that will remain fixed at 55% equity, 45% debt, consistent with SEPII surcharge.  The stipulated annualdepreciation rate will be fixed at 3.33%. The stipulated cost of debt for each year will be the weighted averagelong-term cost of debt of Enbridge Energy Partners, L.P. at the end of theprior calendar year.  The stipulated costof equity will be fixed at a 9% real rate of return plus inflation.  The inflation rate used will be the currentyear CPI-U as determined from time to time in accordance with the Opinion 154-Bmethodology.  The tax allowance componentof the cost of service will be determined each year in accordance with theFERC’s tax allowance policy in effect in such year.  All incremental operating costs, property or

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similar taxes, and fuel andpower expenses associated with the Southern Access Mainline Expansion will beincluded in the cost of service, including an adjustment for power costs thatis described in detail in paragraph 5 of Exhibit III.  As set forth in paragraph 6 of Exhibit III,in calculating the annual surcharge, the revenue synergies on the U.S. portionof the expansion will be split 50/50 between Enbridge Energy and theshippers.  This agreed-upon allocationapportions the revenue benefits of the increased capacity, part of which areattributable to previously constructed facilities, and provides both the pipelineand the shippers with benefits across a range of throughput outcomes.

Thenet change in the overall rates from Hardisty to U.S. destinations is modestsince the Canadian rates of EPI are expected to decline in response toincreased volumes, partially offsetting the expected increase in the tariffrates for the Lakehead System.  Forillustrative purposes, Exhibit VI sets forth an estimate of the surchargecomponent for transportation of heavy crude petroleum from the internationalborder to Chicago as of 2009.  Thisillustration is offered solely to provide an approximation of the magnitude ofthe planned surcharge; the actual calculation will be made at the time of theannual surcharge filings.   For context,Exhibit VI also shows the net change in the total rate from Hardisty toChicago, which reflects the offsetting effects of expected rate reductions inCanada.

As with the original Offer of Settlement that resulted in the *Facilities Surcharge Order*, Enbridge Energy proposes thatthe Commission follow its Rule 602 procedures for processing this Offer ofSettlement.  In particular, partiesseeking to comment on any aspect of the proposed settlement should be requiredto do so within 20 days of the date of the filing of this Offer of Settlement(Rule 602(f)(2)).  Reply comments wouldthen be due 10 days later.  Following

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receiptof comments and reply comments, if any, the Commission should proceedexpeditiously to consider this Offer of Settlement, as requested above.11

**CONCLUSION**

For the reasons set forth above, Enbridge Energy respectfully requeststhat the Commission approve this supplemental agreement under the FacilitiesSurcharge framework pursuant to 18 C.F.R. § 385.602 and permit the SouthernAccess Mainline Expansion component of the Facilities Surcharge to take effectat such time as the relevant facilities are placed in service, as requestedherein.12 Enbridge Energy further requests that the Commission provide expeditedtreatment of this Offer of Settlement to the extent possible, to avoid anyunnecessary delays in the construction schedule for this importantinfrastructure project.
|   | Respectfully submitted,                           |
|--------|---------------------------------------------------|
|   |                                              |
|   |                                              |
|   | /s/ Steven Reed                                   |   |
|   | Steven Reed                                       |
|   | John Clopper                                      |
|   | STEPTOE & JOHNSON LLP                         |
|   | 1330 Connecticut Ave., N.W.                       |
|   | Washington, D.C. 20036                            |
|   |                                              |
|   | Counsel for Enbridge Energy, Limited  Partnership |

 

December21, 2005

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11 For convenience, a form of Notice ofSettlement is attached as Exhibit VII.

12 Enbridge Energy requests that the Commissionwaive the filing requirements under 18 C.F.R. §§ 342.1, 342.3(a), and 342.4 tothe extent necessary to facilitate the filing of this proposed surcharge.  The Commission’s approval of this Offer ofSettlement will not constitute approval of, or precedent regarding, anyprinciple or issue settled.

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##### **Exhibit I**

Below is an itemizationof the U.S. facilities for the Southern Access Expansion Project

Mainline Expansion

Stage 1 – Downstream of Superior

Ø    321 miles of 30-inch pipe, (Superior,Wisconsin to Delavan, Wisconsin)

Ø    2 - 3,500**HPpump and motor additions

Ø    29 pump modifications

Ø    4 pump stations (Delavan, Wisconsin toGriffith, Indiana)

Ø    New power infrastructure at new locations,and infrastructure upgrades and transformer modifications at existing stationsas required

Ø    New Line 14 station at Shorewood

Ø    Line 6A debottlenecking consisting of SCADAmodifications; installation of 2 VFD’s at existing facilities; PCV review andtuning at 27 sites; installation of an in-line booster pump; and a transientanalysis

Stage 1 – Canada-U.S. Border to Superior

Ø    Pump modification at 7 sites

Ø    Station piping upgrades at 5 sites

Ø    Transformer upgrades

Stage 2 – Downstream of Superior

Ø    133 miles of 30-inch pipe, (Delavan Wisconsinto Flanagan, Illinois)

Ø    A new pump station at Superior, Wisconsin

Ø    4 - Line 14 station tie-ins

Ø    Superior and Flanagan Terminal connections

Ø    6 new stations (4 of which are at existingsites)

Ø    1 – 400,000 barrel breakout tank at Griffithterminal

Ø    Reversal of Spearhead Pipeline to Chicagoconsisting of a new pump station at Flanagan, Illinois, and refurbishment of 1million barrels of tankage at Flanagan.

Stage 2 – Canada-U.S. border to Superior

Ø    Pump modifications at 4 sites

Ø    Upgrade motors from 2,500HP to 5,000HP at 7sites

Ø    Electrical system upgrades to 4 sites

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December 2l, 2005

Rick SandahlVice President, Market DevelopmentEnbridge Pipelines Inc.3000, 425 - I Street S.W.Calgary, Alberta T2P 3L8

Dear Mr. Sandahl:

***Re:******Enbridge Pipelines’ Southern Access Mainline Expansion                                                                                                 ***

This letter confirms the agreement of the CanadianAssociation of Petroleum Producers (CAPP) to the use of the existing FacilitiesSurcharge mechanism, as approved by the U.S. Federal Energy RegulatoryCommission (FERC) on June 30, 2004, to implement a surcharge for recovery ofcosts incurred by Enbridge Energy, Limited Partnership (Enbridge) for anexpansion of Enbridge’s mainline capacity known as the Southern Access MainlineExpansion. This agreement is limited to the expansion phase of the SouthernAccess project (*i.e*., the expansion of capacityfrom the Canada/U.S. border to Flanagan, Illinois, with further service toGriffith, Indiana, via**asegment of the Spearhead Pipeline to be utilized by Enbridge), and does notapply to any aspect of the extension phase of the Southern Access project (*i.e*., the potential extension of service from Flanagansouthward to Patoka or Wood River, Illinois).

CAPP understands the expansion that is the subject ofthis letter will proceed in stages. The first stage will provide an initialincrease in capacity of approximately 44,000 (barrels per day (b/d) scheduledto be in place in 2007, with an additional 146,000 b/d scheduled to be in placein 2008. The second stage will add a further 210,000 b/d, which is scheduled tobe in place in 2009. CAPP undertakes this agreement with the understandingthat, if requested in writing to do so by CAPP, on behalf of industry, Enbridgewill defer the development or completion of a stage until CAPP provides furthernotice in writing that the stage should proceed (Enbridge would be entitled torecover through the surcharge costs incurred prior to CAPP’s request fordeferral). CAPP has requested this flexibility to ensure additional pipelinecapacity is developed and completed in a timely manner in conjunction with thegrowth in crude oil supply.

CAPP understands that Enbridge Energy will submit anOffer of Settlement to the FERC seeking approval for the Southern AccessMainline Expansion Surcharge and its inclusion in the Facilities Surchargemechanism. Exhibit III to the Offer of Settlement is a description of the termsof the proposed Southern Access Mainline Expansion Surcharge, including thecalculation of power costs to be included in the surcharge. CAPP agrees thatthe Southern Access Mainline Expansion

 
|        | 2100, 30 – 7th Ave. S.W. | 905, 235 Water  Street         |   |
|--------|------------------------------------|--------------------------------|--------|
|   | Calgary, Alberta                   | St. John’s,  Newfoundland |   |
|   | Canada T2P 3N9                     | Canada A1C 1B6                 |   |
|   | Tel (403) 267-1100                 | Tel (709)  724-4200            |   |
|   | Fax (403) 261-4622                 | Fax (709)  724-4225            |   |
|   |                               |                           |   |
|   | Email:  ommunication@capp.ca       | Website:  www.capp.ca          |   |

 

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Letter to Mr. Rick Sandahl

Re: Enbridge Pipelines’ Southern Access Mainline Expansion

Page 2

 

 

Surcharge is to becalculated in accordance with the terms set out in Exhibit III to the Offer ofSettlement, for a period of 30 years (the projected depreciable life of the newfacilities), and that the surcharge is to be based on the underlying Enbridgetoll design where tolls vary by distance and crude type.

CAPP authorizes Enbridge tosubmit this letter to the FERC in connection with the Offer of Settlement andto convey to the FERC that CAPP is in agreement with the use of the FacilitiesSurcharge mechanism for the Southern Access project.  CAPP is of the view that the proposed SouthernAccess Mainline Expansion will enhance the capacity, efficiency and flexibilityof the Enbridge system and that the Facilities Surcharge is an appropriatemechanism for recovery of the costs associated with the Southern AccessMainline Expansion project.

Should further clarificationof this letter be required, please contact me at (403) 267-1137.

Sincerely,
| /s/ Onno DeVries                            |   |
|---------------------------------------------|--------|
| Onno DeVries                                |
| General Manager,  Oil Sands and Oil Markets |

 

 

CAPP_EDMS-#96678

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**EXHIBIT III**

SOUTHERN ACCESS MAINLINEEXPANSION SURCHARGE TERMS

1.                                       TheU.S. portion of the proposed Southern Access Mainline Expansion will consistprincipally of construction of a new 30-inch pipeline from Superior, Wisconsinto Flanagan, Illinois, along with certain system modifications upstream ofSuperior.  This project is expected toprovide approximately 400,000 barrels per day of heavy crude petroleum capacityfrom the Canada/U.S. border to Flanagan, and will also include utilization of asegment of the Spearhead Pipeline to permit volumes to access Griffith,Indiana, via Flanagan.

2.                                       EnbridgeEnergy, Limited Partnership (“Enbridge Energy”) proposes to recover the cost ofservice of the U.S. portion of the Southern Access Mainline Expansion through asurcharge (the “Southern Access Mainline Expansion Surcharge” or “Surcharge”)to be included in the systemwide rates of Enbridge Energy in accordance withEnbridge Energy’s overall rate design. The Surcharge would be included in the existing Facilities Surchargethat is added to the indexed base rates and other existing surcharges currentlyin effect in Enbridge Energy’s rates, and would not itself be subject toindexing.

3.                                       TheSurcharge would be calculated on a cost of service basis and trued-up annually inthe same manner as the existing SEP II surcharge in Enbridge Energy’srates.  In particular, Enbridge Energyproposes to file the Southern Access Mainline Expansion Surcharge at such timeas the relevant facilities go into service, based on an estimate of the firstyear’s projected costs and throughput volumes. Thereafter, on April 1 of each succeeding year, Enbridge Energy willadjust the Surcharge to true-up the prior year’s estimated costs and throughputvolumes to actual data and to reflect the projected costs and throughputvolumes for

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the then-current year. The Surcharge will remain in effect for 30 years (the projecteddepreciable life of the new facilities).  Enbridge Energy shall perform a final true-up within three months afterthe expiration of the 30 year-period.  Ifthe final true-up discloses a difference between the estimated costs andthroughput volumes and the actual data, such difference (negative or positive)shall be recovered or credited on throughput volumes over the following twelvemonth-period.

4.                                       Forpurposes of the cost of service calculation, Enbridge Energy will use theFERC’s Opinion No. 154-B methodology, but employing a stipulated capitalstructure that will remain fixed at 55% equity, 45% debt, consistent with SEPII.  The stipulated annual depreciationrate will be fixed at 3.33%.  Thestipulated cost of debt for each year will be the weighted average long-termcost of debt of Enbridge Energy Partners, L.P. at the end of the prior calendaryear.  The stipulated cost of equity willbe fixed at a 9% real rate of return plus inflation.  The inflation rate used will be the currentyear CPI-U as determined from time to time in accordance with the Opinion 154-Bmethodology.  The tax allowance componentof the cost of service will be determined each year in accordance with theFERC’s tax allowance policy in effect in such year.  All incremental operating costs, property orsimilar taxes, and fuel and power expenses associated with the Southern AccessMainline Expansion will be included in the cost of service, including theadjustment described in paragraph 5 hereof (the “Power Cost Adjustment”).

5.                                       ThePower Cost Adjustment to be included in the Surcharge will reflect theincremental variable costs (positive or negative) resulting from the SouthernAccess Mainline Expansion.  The PowerCost Adjustment will be calculated in the following manner:

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a.                                       Thecosts or cost savings to be included in the Power Cost Adjustment are thoseincremental costs or cost savings associated with drag reducing agent, naturalgas, diesel and other fuels, electrical power, utility ratchet charges, and anyand all other energy charges incurred to transport commodities through theSouthern Access Mainline Expansion (“Power Costs”).

b.                                      Aswith other components of the Southern Access Mainline Expansion Surcharge, thePower Cost Adjustment will be forecast for each calendar year and the forecastwill be used in calculating the Surcharge to be effective on April 1 of thatyear.  The forecast will take account ofvolume and mill-rate projections and will be based on the principles set forthin this paragraph 5.  During the calendaryear, Enbridge Energy will calculate the Power Cost Adjustment (positive ornegative) for each month based on the volume transported, crude slate and PowerCosts for that month.  The monthlyamounts so calculated will be summed (taking into account both positive andnegative amounts) and the resulting total for the year will be deemed the finalPower Cost Adjustment for that year. Enbridge Energy will true-up the forecasted Power Cost Adjustment to thefinal Power Cost Adjustment for the calendar year, and the difference (positiveor negative) will be included in the calculation of the Surcharge to takeeffect on April 1 of the year following the calendar year in which theapplicable Power Costs were incurred, up to and including April 1 of thethirtieth calendar year of the Surcharge.

c.                                       Themonthly calculation of the final Power Cost Adjustment will be performedseparately for:  (1) the linesimmediately downstream of Superior, Wisconsin, other than line 5 (*i.e.*, Lines 6a, 14 and the new Southern Access line) (the“Ex-Superior Lines”); (2) the lines between the Canada/US border and Superior (*i.e.*, Lines 2, 3, 4 and 13) (the “Border to SuperiorLines”); and (3) the portion of the Spearhead Pipeline between Flanagan,Illinois, and

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Griffith, Indiana, which Enbridge Energy plans toreconfigure to permit deliveries from Flanagan to Griffith (the “SpearheadLine”).  The total Power Cost Adjustmentfor each month will be the sum of the individual components (positive ornegative) for each of these three segments.

d.                                      ThePower Cost Adjustment component for the Ex-Superior Lines will be determined bycomparing the actual Power Costs incurred for operation of the Ex-SuperiorLines during a given month (the “Ex-Superior Actual Power Costs”) with acalculation of the Power Costs that would have been incurred to operate Lines6a and 14 during that month without the expansion facilities (*i.e.*, without the Southern Access line and without theShorewood pump station on line 14) (the “Ex-Superior Base Power Costs”),assuming that throughput on the Ex-Superior Lines is equal to the greater of(i)  the throughput actually transportedon the Ex-Superior Lines during a given month (the “Actual Ex-SuperiorThroughput”) or (ii) the Pre-Expansion Capacity of Lines 6a and 14 during thatmonth and applying the following adjustments and procedures:

(1)                                  Forall purposes under this paragraph 5, Pre-Expansion Capacity means the capacityof the pre-expansion facilities in a given month assuming the same crude slateas the crude slate actually transported through the expanded facilities duringthat month (*i.e.*, all else being equal, a relativelyheavier crude slate will reduce the Pre-Expansion Capacity and a relativelylighter crude slate will increase the Pre-Expansion Capacity in accordance withthe hydraulic model employed by Enbridge Energy).  The Pre-Expansion Capacity of Line 6a isassumed to be 100,000 m3/d with an all-heavy petroleum crude slate and usingthe heater at

4

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Superior.1 The Pre-Expansion Capacity of Line 14 can vary from 39,000 m3/d to51,500 m3/d, depending upon the crude slate transported.

(2)                                  Tothe extent Actual Ex-Superior Throughput exceeds the Pre-Expansion Capacity ofLines 6a and 14, the Actual Ex-Superior Throughput will be prorated such thatthe Pre-Expansion Capacity of Lines 6a and 14 is not exceeded (resulting in“Prorated Ex-Superior Throughput”).  Thedifference between Actual Ex-Superior Throughput and Prorated Ex-SuperiorThroughput constitutes the Qualifying Volumes for purposes of paragraphs5(e)(1) and 6 below.

(3)                                  Oncethe Prorated Ex-Superior Throughput is determined, Enbridge Energy’s standardhydraulic model will be used to calculate the Power Costs that would have beenincurred to operate Lines 6a and 14 at their Pre-Expansion Capacity in thatmonth assuming the Prorated Ex-Superior Throughput.  The Power Costs so calculated will be theEx-Superior Base Power Costs for that month.

(4)                                  Thedifference between the Ex-Superior Actual Power Costs and the Ex-Superior BasePower Costs for any month (positive or negative) will be the Power CostAdjustment component for the Ex-Superior Lines for that month.

(5)                                  Illustrativeexamples of the calculation of the monthly Power Cost Adjustment component forthe Ex-Superior Lines are set forth in Exhibit A hereto.

e.                                       ThePower Cost Adjustment component for the Border to Superior Lines will bedetermined by comparing the actual Power Costs incurred to operate the Borderto Superior Lines during a given month (the “BTS Actual Power Costs”) with acalculation of the Power Costs that would have been incurred to operate theBorder to Superior Lines during that

----

1 Theterm “m3/d” means cubic meters per day. A cubic meter of crude oil is approximately 6.29 barrels.

5

----

month without the expansion Ex-Superior facilitiesdescribed in paragraph 5(d) and without the expansion of capacity on Lines 3and 4 (the “BTS Base Power Costs”), and applying the following adjustments todetermine BTS Base Power Costs:

(1)                                  Asstep (1), the actual throughput transported through the Border to SuperiorLines during the month will first be reduced by subtracting the QualifyingVolumes for that month calculated under paragraph 5(d)(2) above.

(2)                                  Asstep (2), to the extent the throughput volume remaining after step 1 wouldrequire use of capacity in Line 3 or Line 4 in excess of the Pre-ExpansionCapacity of either of those lines, the throughput volume will be furtherreduced by eliminating volumes transported from the Border to Superior untilthe assumed volume transported through Lines 3 and 4 does not exceed thePre-Expansion Capacity of those lines. The Pre-Expansion Capacity of Line 3 is assumed to be 71,000 m3/d withan all-heavy petroleum crude slate.  ThePre-Expansion Capacity of Line 4 is assumed to be 106,500 m3/d with anall-heavy petroleum crude slate.

(3)                                  Aftersteps (1) and (2), Enbridge Energy’s standard hydraulic model will be used tocalculate the Power Costs that would have been incurred during the month inquestion to operate the Border to Superior Lines at the throughput volumeremaining after the reductions to actual throughput provided for in steps (1)and (2).    The amount so calculated willbe the BTS Base Power Costs for that month.

(4)                                  Thedifference between the BTS Actual Power Costs and the BTS Base Power Costs forany month will be the Power Cost Adjustment component for the Border toSuperior Lines for that month.

6

----

(5)                                  Illustrativeexamples of the calculation of the monthly Power Cost Adjustment component forthe Border to Superior Lines are set forth in Exhibit B hereto.

f.                                         ThePower Cost Adjustment component for the Spearhead Line will consist of allPower Costs incurred for movements from Flanagan to Griffith during the monthin question.

6.                                       Inrecognition of the previously constructed Terrace capacity that will beutilized as part of this expansion, the cost of service for the Surcharge willbe credited with revenue associated with the new capacity available downstreamfrom Superior, Wisconsin by multiplying the Qualifying Volumes determined underparagraph 5(d)(2) hereof by 50% of the applicable Enbridge Energy tariff ratesfrom the Canada/US Border to Chicago (exclusive of the Facilities Surcharge andthe Southern Access Mainline Expansion Surcharge).

7

----

**Exhibit A**

**Power Cost****Adjustment**

**Ex-Superior Lines**

(Actualex-Superior Throughput is less than Pre-Expansion Capacity)

Examples of Power CostAdjustment

*Example 1*
| Assume:    | For month of October 2010                                                                                                                                                                                                                                                               |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                                    |
|       | The ex-Superior Actual Power Costs to operate Lines  6A, 14 and SA ex-Superior, WI is US$2.6 million.                                                                                                                                                                                   |
|       |                                                                                                                                                                                                                                                                                    |
|       | The actual throughput transported through the  ex-Superior Lines (L6A, 14 and SA) during the month is 129,500 m3/d.                                                                                                                                                                     |
|       |                                                                                                                                                                                                                                                                                    |
|       | The Pre-Expansion Capacity of the combined Line 6A  and Line 14 is 149,500 m3/d (with L14’s actual SA linefill of 60% light, 40%  heavy).                                                                                                                                          |
|       |                                                                                                                                                                                                                                                                                    |
|       | The standard Enbridge hydraulic model derives an  ex-Superior Base Power Cost of US$4.3 million associated with the throughputs  of 149,500 m3/d on L6A (all heavy) and L14 (60% light, 40% heavy).                                                                                     |
|       |                                                                                                                                                                                                                                                                                    |
|       |                                                                                                                                                                                                                                                                                    |
| Thus:      | The Power Cost Adjustment component for October 2010  will be the ex-Superior Actual Power Costs less the ex-Superior Base Power  Cost = (US$2.6 million – US$4.3 million) = -US$1.7 million.                                                                                      |
|       |                                                                                                                                                                                                                                                                                    |
|       |                                                                                                                                                                                                                                                                                    |
| Therefore: | The Power Cost Adjustment of -US$1.7 million for  October 2010 will be summed together with the Power Cost Adjustments  calculated for the other 11 months in the 2010 calendar year and together  will be recovered as part of the 2011 Southern Access Mainline Expansion  Surcharge. |

 

* These Power CostAdjustments are used for illustrative purposes and do not constitute or implythat they will be the actual or anticipated Power Cost Adjustments for October2010 or any other Month.

----

**Exhibit A (cont’d)**

**Power Cost Adjustment**

**Ex-SuperiorLines**

(Actualex-Superior Throughput is equal or greater than Pre-Expansion Capacity)

Examples of Power CostAdjustment

*Example 2A*
| Assume:    | For month of October 2010                                                                                                                                                                                                                                                               |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                                    |
|       | The ex-Superior Actual Power Costs to operate Lines  6A, 14 and SA ex-Superior, WI is US$6.2 million.                                                                                                                                                                                   |
|       |                                                                                                                                                                                                                                                                                    |
|       | The actual throughput transported through the  ex-Superior Lines (L6A, 14 and SA) during the month is 189,500 m3/d. (Actual  Line 14 crude slate is 60% light, 40% heavy).                                                                                                              |
|       |                                                                                                                                                                                                                                                                                    |
|       | The Pre-Expansion Capacity of the combined Line 6A  and Line 14 is 149,500 m3/d (with L14’s actual SA linefill of 60% light, 40%  heavy).                                                                                                                                          |
|       |                                                                                                                                                                                                                                                                                    |
|       | The standard Enbridge hydraulic model derives an  ex-Superior Base Power Cost of US$6.3 million associated with the throughputs  of 149,500 m3/d on L6A (all heavy) and L14 (60% light, 40% heavy).                                                                                     |
|       |                                                                                                                                                                                                                                                                                    |
|       |                                                                                                                                                                                                                                                                                    |
| Thus:      | The Power Cost Adjustment component for October 2010  will be the ex-Superior Actual Power Costs less the ex-Superior Base Power  Cost = (US$6.2 million – US$6.3 million) = -US$0.1 million.                                                                                      |
|       |                                                                                                                                                                                                                                                                                    |
|       |                                                                                                                                                                                                                                                                                    |
| Therefore: | The Power Cost Adjustment of -US$0.1 million for  October 2010 will be summed together with the Power Cost Adjustments  calculated for the other 11 months in the 2010 calendar year and together  will be recovered as part of the 2011 Southern Access Mainline Expansion  Surcharge. |

 

* These Power CostAdjustments are used for illustrative purposes and do not constitute or implythat they will be the actual or anticipated Power Cost Adjustments for October2010 or any other Month.

2

----

**Exhibit A (cont’d)**

**PowerCost Adjustment**

**Ex-SuperiorLines**

(lighter Line 14crude slate resulting in higher Pre-Expansion Capacity)

Examples of Power CostAdjustment

*Example 2B*
| Assume:    | For month of October 2010                                                                                                                                                                                                                                                               |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                                    |
|       | The ex-Superior Actual Power Costs to operate Lines  6A, 14 and SA ex-Superior, WI is US$6.0 million.                                                                                                                                                                                   |
|       |                                                                                                                                                                                                                                                                                    |
|       | The actual throughput transported through the  ex-Superior Lines (L6A, 14 and SA) during the month is 189,500 m3/d. (Actual  Line 14 crude slate is 75% light, 25% heavy).                                                                                                              |
|       |                                                                                                                                                                                                                                                                                    |
|       | The Pre-Expansion Capacity of the combined Line 6A  and Line 14 is 151,500 m3/d (with L14’s actual SA linefill of 75% light, 25%  heavy).                                                                                                                                          |
|       |                                                                                                                                                                                                                                                                                    |
|       | The standard Enbridge hydraulic model derives an  ex-Superior Base Power Cost of US$6.2 million associated with the throughputs  of 151,500 m3/d on L6A (all heavy) and L14 (75% light, 25% heavy).                                                                                     |
|       |                                                                                                                                                                                                                                                                                    |
| Thus:      | The Power Cost Adjustment component for October 2010  will be the ex-Superior Actual Power Costs less the ex-Superior Base Power  Cost = (US$6.0 million – US$6.2 million) = -US$0.2 million.                                                                                      |
|       |                                                                                                                                                                                                                                                                                    |
| Therefore: | The Power Cost Adjustment of -US$0.2 million for  October 2010 will be summed together with the Power Cost Adjustments  calculated for the other 11 months in the 2010 calendar year and together  will be recovered as part of the 2011 Southern Access Mainline Expansion  Surcharge. |

 

* These Power CostAdjustments are used for illustrative purposes and do not constitute or implythat they will be the actual or anticipated Power Cost Adjustments for October2010 or any other Month.

3

----

**Exhibit A (cont’d)**

**PowerCost Adjustment**

**Ex-SuperiorLines**

(heavier Line 14crude slate resulting in lower Pre-Expansion Capacity)

Examples of Power CostAdjustment

*Example 2C*
| Assume:    | For month of October 2010                                                                                                                                                                                                                                                              |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                                   |
|       | The ex-Superior Actual Power Costs to operate Lines  6A, 14 and SA ex-Superior, WI is US$6.7 million.                                                                                                                                                                                  |
|       |                                                                                                                                                                                                                                                                                   |
|       | The actual throughput transported through the  ex-Superior Lines (L6A, 14 and SA) during the month is 189,500 m3/d. (Actual  Line 14 crude slate is 50% light, 50% heavy).                                                                                                             |
|       |                                                                                                                                                                                                                                                                                   |
|       | The Pre-Expansion Capacity of the combined Line 6A  and Line 14 is 145,000 m3/d (with L14’s actual SA linefill of 50% light, 50%  heavy).                                                                                                                                         |
|       |                                                                                                                                                                                                                                                                                   |
|       | The standard Enbridge hydraulic model derives an  ex-Superior Base Power Cost of US$6.1 million associated with the throughputs  of 145,000 m3/d on L6A (all heavy) and L14 (50% light, 50% heavy).                                                                                    |
|       |                                                                                                                                                                                                                                                                                   |
| Thus:      | The Power Cost Adjustment component for October 2010  will be the ex-Superior Actual Power Costs less the ex-Superior Base Power  Cost = (US$6.7 million – US$6.1 million) = US$0.6 million.                                                                                      |
|       |                                                                                                                                                                                                                                                                                   |
| Therefore: | The Power Cost Adjustment of US$0.6 million for  October 2010 will be summed together with the Power Cost Adjustments  calculated for the other 11 months in the 2010 calendar year and together  will be recovered as part of the 2011 Southern Access Mainline Expansion  Surcharge. |

 

* These Power CostAdjustments are used for illustrative purposes and do not constitute or implythat they will be the actual or anticipated Power Cost Adjustments for October2010 or any other Month.

4

----

**Exhibit B**

**PowerCost Adjustment**

**Borderto Superior**

(Actualex-Superior throughput is greater than pre Southern Access ex-Superiorthroughput, Line 3 and 4 less than Terrace III capacity)

Examples of Power CostAdjustment

*Example 1*
| Assume: | For month of October 2010                                                                                                                                                                                                                                     |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                          |
|    | The actual throughput transported ex-Superior on  Line 6A, Line 14 and the Southern Access line is 159,500 m3/d. The crude  slate is 20% light, 80% heavy which when allocated pre-Southern Access yields  a Line 14 crude slate of 60% light, and 40% heavy. |
|    |                                                                                                                                                                                                                                                          |
|    | The actual throughput transported on the combined  Line 3 and Line 4 is 180,000 m3/d of crude.                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                          |
|    | The Pre-Expansion Capacity of the combined Line 3  and Line 4 is 177,300 m3/d.                                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                          |
|    | The Pre-Expansion Capacity of the combined Line 6A  and Line 14 is 149,500 m3/d (with L14’s actual SA linefill of 60% light, 40%  heavy).                                                                                                                |
|    |                                                                                                                                                                                                                                                          |
|    | The actual throughput transported through the Border  to Superior Lines during the month is 280,000 m3/d.                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                          |
|    | The BTS Actual Power Costs to operate Lines 1, 2, 3,  4, and 13 between the Canada/US international border and Superior, WI is  US$4.0 million.                                                                                                               |
|    |                                                                                                                                                                                                                                                          |
|    | The standard Enbridge hydraulic model derives a BTS  Base Power Cost of US$3.5 million associated with a volume of 270,000 m3/d.                                                                                                                              |
|    |                                                                                                                                                                                                                                                          |
| Thus:   |                                                                                                                                                                                                                                                          |
|    |                                                                                                                                                                                                                                                          |
|    | The pre-Southern  Access Line 14 capacity is 49,500 m3/d for total Pre-Expansion Capacity of  149,500 m3/d ex-Superior.                                                                                                                                       |
|    |                                                                                                                                                                                                                                                          |
|    | The Qualifying  Volume = actual throughput ex-Superior less the Pre-Expansion Capacity =  (159,500 m3/d – 149,500 m3/d) = 10,000 m3/d.                                                                                                                   |

 

----

 
| Therefore: |                                                                                                                                                                                                                                                                                   |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                                   |
|       | Step 1:                                                                                                                                                                                                                                                                                |
|       |                                                                                                                                                                                                                                                                                   |
|       | Actual  throughput on Line 3 and Line 4 less Qualifying Volumes = (180,000 m3/d –  10,000 m3/d) = 170,000 m3/d.                                                                                                                                                                   |
|       |                                                                                                                                                                                                                                                                                   |
|       | Step 2:                                                                                                                                                                                                                                                                                |
|       |                                                                                                                                                                                                                                                                                   |
|       | Does not apply  since adjusted Line 3 and Line 4 throughput does not exceed the Pre-Expansion  Capacity of Line 3 and Line 4.                                                                                                                                                          |
|       |                                                                                                                                                                                                                                                                                   |
| And:       |                                                                                                                                                                                                                                                                                   |
|       |                                                                                                                                                                                                                                                                                   |
|       | The Pro-Rated BTS throughput used to determine the  BTS Base Power Costs are the Actual throughput adjusted for Steps 1 and 2  above = (280,000 m3/d – 10,000 m3/d) = 270,000 m3/d.                                                                                               |
|       |                                                                                                                                                                                                                                                                                   |
| Thus:      | The Power Cost Adjustment component for October 2010  will be the BTS Actual Power Costs less the BTS Base Power Cost = (US$4  million – US$3.5 million) = US$0.5 million.                                                                                                        |
|       |                                                                                                                                                                                                                                                                                   |
| Therefore: | The Power Cost Adjustment of US$0.5 million for  October 2010 will be summed together with the Power Cost Adjustments  calculated for the other 11 months in the 2010 calendar year and together  will be recovered as part of the 2011 Southern Access Mainline Expansion  Surcharge. |

 

* These Power CostAdjustments are used for illustrative purposes and do not constitute or implythat they will be the actual or anticipated Power Cost Adjustments for October2010 or any other Month.

-2-

----

**Exhibit B (cont’d)**

**PowerCost Adjustment**

**Borderto Superior**

(Actualex-Superior throughput is greater than pre Southern Access ex-Superiorthroughput, Line 3 and 4 greater than Terrace III capacity)

Examples of Power CostAdjustment

*Example 2*
| Assume: | For month of October 2010                                                                                                                                                                                                                                     |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                          |
|    | The actual throughput transported ex-Superior on  Line 6A, Line 14 and the Southern Access line is 159,500 m3/d. The crude  slate is 20% light, 80% heavy which when allocated pre-Southern Access yields  a Line 14 crude slate of 60% light, and 40% heavy. |
|    |                                                                                                                                                                                                                                                          |
|    | The actual throughput transported on the combined  Line 3 and Line 4 is 196,000 m3/d of crude.                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                          |
|    | The Pre-Expansion Capacity of the combined Line 3  and Line 4 is 177,300 m3/d.                                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                          |
|    | The Pre-Expansion Capacity of the combined Line 6A  and Line 14 is 149,500 m3/d (with L14’s actual SA linefill of 60% light, 40%  heavy).                                                                                                                |
|    |                                                                                                                                                                                                                                                          |
|    | The actual throughput transported through the Border  to Superior Lines during the month is 289,000 m3/d.                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                          |
|    | The BTS Actual Power Costs to operate Lines 1, 2, 3,  4, and 13 between the Canada/US international border and Superior, WI is  US$4.5 million.                                                                                                               |
|    |                                                                                                                                                                                                                                                          |
|    | The standard Enbridge hydraulic model derives a BTS  Base Power Cost of US$3.5 million associated with a volume of 270,300 m3/d.                                                                                                                              |
|    |                                                                                                                                                                                                                                                          |
| Thus:   |                                                                                                                                                                                                                                                          |
|    |                                                                                                                                                                                                                                                          |
|    | The pre-Southern Access Line 14 capacity is 49,500  m3/d for total Pre-Expansion Capacity of 149,500 m3/d ex-Superior.                                                                                                                                        |

 

-3-

----

 
|            | The Qualifying Volume = actual throughput  ex-Superior less the Pre-Expansion Capacity = (159,500 m3/d – 149,500 m3/d) =  10,000 m3/d.                                                                                                                                            |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                                   |
| Therefore: |                                                                                                                                                                                                                                                                                   |
|       |                                                                                                                                                                                                                                                                                   |
|       | Step 1:                                                                                                                                                                                                                                                                                |
|       |                                                                                                                                                                                                                                                                                   |
|       | Actual throughput on Line 3 and Line 4 less  Qualifying Volumes = (196,000 m3/d – 10,000 m3/d) = 186,000 m3/d                                                                                                                                                                     |
|       |                                                                                                                                                                                                                                                                                   |
|       | Step 2:                                                                                                                                                                                                                                                                                |
|       |                                                                                                                                                                                                                                                                                   |
|       | Adjusted actual combined Line 3 and Line 4  throughput from Step 1 less the Pre-Expansion Capacity = (186,000 m3/d –  177,300 m3/d) = 8,700 m3/d.                                                                                                                                 |
|       |                                                                                                                                                                                                                                                                                   |
| And:       |                                                                                                                                                                                                                                                                                   |
|       |                                                                                                                                                                                                                                                                                   |
|       | The Pro-Rated BTS throughput used to determine the  BTS Base Power Costs is the Actual throughput adjusted for Steps 1 and 2  above = (289,000 m3/d – 10,000 m3/d – 8,700 m3/d) = 270,300 m3/d.                                                                              |
|       |                                                                                                                                                                                                                                                                                   |
| Thus:      | The Power Cost Adjustment component for October 2010  will be the BTS Actual Power Costs less the BTS Base Power Cost = (US$4.5  million – US$3.5 million) = US$1.0 million.                                                                                                      |
|       |                                                                                                                                                                                                                                                                                   |
| Therefore: | The Power Cost Adjustment of US$1.0 million for  October 2010 will be summed together with the Power Cost Adjustments  calculated for the other 11 months in the 2010 calendar year and together  will be recovered as part of the 2011 Southern Access Mainline Expansion  Surcharge. |

 

* These Power CostAdjustments are used for illustrative purposes and do not constitute or implythat they will be the actual or anticipated Power Cost Adjustments for October2010 or any other Month.

-4-

----

Exhibit IV

 

 

----

Exhibit V

----

Exhibit V

 

 

----

**ExhibitVI**

**Enbridge Energy, Limited Partnership**

**SouthernAccess Project Illustrative Heavy Rates**

**AssumesFull Utilization of Southern Access Capacity**

 
|                                                                | *** *** | ***2007*** | *** *** | ***2008*** | *** *** | ***2009*** | *** *** | ***2010*** | *** *** |
|----------------------------------------------------------------|--------------|------------|--------------|------------|--------------|------------|--------------|------------|--------------|
| **From Hardisty, Alberta to  Griffith, Indiana ($US/bbl)**     | ** **   | ** ** |         |       |         |       |         |       |         |
| Base Toll                                                      |         | 0.70       |         | 0.71       |         | 0.73       |         | 0.74       |         |
| TRV                                                            |         | 0.17       |         | 0.08       |         | 0.02       |         | 0.00       |         |
| Terrace Surcharge                                              |         | 0.03       |         | 0.03       |         | 0.03       |         | 0.02       |         |
| Spearhead Surcharge                                            |         | 0.02       |         | 0.02       |         | 0.02       |         | 0.02       |         |
| Exxon Mobil Surcharge                                          |         | 0.02       |         | 0.02       |         | 0.02       |         | 0.02       |         |
| Southern Access  Surcharge                                     |         | 0.00       |         | 0.00       |         | (0.02      | )            | (0.01      | )            |
|                                                           |         |       |         |       |         |       |         |       |         |
| Total Enbridge  Pipelines Inc. - CANADA                        |         | 0.94       |         | 0.85       |         | 0.80       |         | 0.78       |         |
|                                                           |         |       |         |       |         |       |         |       |         |
| Index Rate                                                     |         | 0.75       |         | 0.76       |         | 0.78       |         | 0.80       |         |
| SEP II Surcharge                                               |         | 0.13       |         | 0.12       |         | 0.11       |         | 0.11       |         |
| Terrace Surcharge                                              |         | 0.06       |         | 0.04       |         | 0.01       |         | 0.02       |         |
| Facilities Surcharge                                           |         | 0.01       |         | 0.01       |         | 0.01       |         | 0.01       |         |
| Southern Access  Surcharge                                     |         | 0.01       |         | 0.17       |         | 0.22       |         | 0.22       |         |
|                                                           |         |       |         |       |         |       |         |       |         |
| Total Enbridge Energy,  Limited Partnership - US               |         | 0.95       |         | 1.09       |         | 1.13       |         | 1.14       |         |
|                                                           |         |       |         |       |         |       |         |       |         |
| Total Rate from  Hardisty, Alberta to Griffith, Indiana        | ** **   | **1.88**   | ** **   | **1.94**   | ** **   | **1.93**   | ** **   | **1.93**   | ** **   |
|                                                           |         |       |         |       |         |       |         |       |         |
| **From Hardisty, Alberta to  Clearbrook, Minnesota ($US/bbl)** | ** **   | ** ** |         |       |         |       |         |       |         |
| Base Toll                                                      |         | 0.70       |         | 0.71       |         | 0.73       |         | 0.74       |         |
| TRV                                                            |         | 0.17       |         | 0.08       |         | 0.02       |         | 0.00       |         |
| Terrace Surcharge                                              |         | 0.03       |         | 0.03       |         | 0.03       |         | 0.02       |         |
| Spearhead Surcharge                                            |         | 0.02       |         | 0.02       |         | 0.02       |         | 0.02       |         |
| Exxon Mobil Surcharge                                          |         | 0.02       |         | 0.02       |         | 0.02       |         | 0.02       |         |
| Southern Access  Surcharge                                     |         | 0.00       |         | 0.00       |         | (0.02      | )            | (0.01      | )            |
|                                                           |         |       |         |       |         |       |         |       |         |
| Total Enbridge  Pipelines Inc. - CANADA                        |         | 0.94       |         | 0.85       |         | 0.80       |         | 0.78       |         |
|                                                           |         |       |         |       |         |       |         |       |         |
| Index Rate                                                     |         | 0.19       |         | 0.19       |         | 0.20       |         | 0.20       |         |
| SEP II Surcharge                                               |         | 0.02       |         | 0.02       |         | 0.02       |         | 0.02       |         |
| Terrace Surcharge                                              |         | 0.01       |         | 0.01       |         | 0.00       |         | 0.00       |         |
| Facilities Surcharge                                           |         | 0.00       |         | 0.00       |         | 0.00       |         | 0.00       |         |
| Southern Access  Surcharge                                     |         | 0.00       |         | 0.03       |         | 0.04       |         | 0.04       |         |
|                                                           |         |       |         |       |         |       |         |       |         |
| Total Enbridge Energy,  Limited Partnership - US               |         | 0.22       |         | 0.25       |         | 0.26       |         | 0.26       |         |
|                                                           |         |       |         |       |         |       |         |       |         |
| Total Rate from Hardisty, Alberta to Clearbrook, Minnesota     | ** **   | **1.16**   | ** **   | **1.10**   | ** **   | **1.06**   | ** **   | **1.05**   | ** **   |

 

----

**EXPEDITEDTREATMENT REQUESTED**

**UNITED STATES OF AMERICA**

**BEFORE THE**

**FEDERALENERGY REGULATORY COMMISSION**
|                                          | **)** |                    |
|------------------------------------------|-------|-------------------------|
| **Enbridge Energy, Limited Partnership** | **)** | **Docket No. OR06-___** |
| ** **                               | **)** |                    |

 

**NOTICEOF SETTLEMENT FILING**

Take notice that on December 21, 2005, EnbridgeEnergy, Limited Partnership (“Enbridge Energy”), with the support of theCanadian Association of Petroleum Producers (“CAPP”), submitted an Offer of Settlement under Rule 602 ofthe Commission’s Rules of Practice and Procedure, 18 C.F.R. § 385.602,regarding a supplement to the Facilities Surcharge approved by the Commissionin *Enbridge Energy, Limited Partnership,*107FERC ¶ 61,336 (June 30, 2004) *(“FacilitiesSurcharge Order”).*

Enbridge Energy is a common carrier oil pipelineregulated by the Commission. CAPP is a trade association representing 98percent of the producers of natural gas, crude oil, oil sands, and elementalsulphur exploration, development and production in Canada. As described in the *Facilities Surcharge Order, the*FacilitiesSurcharge is designed to recover the annualized cost of certain projectsundertaken by Enbridge Energy **at**shipperrequest and approved by CAPP for recovery through the surcharge mechanism. ThisOffer of Settlement proposes to include an additional project in the FacilitiesSurcharge---a major planned expansion of Enbridge Energy’s mainline capacity.

Through the Offer of Settlement, Enbridge Energy andCAPP specifically request approval for the inclusion in the FacilitiesSurcharge of the project described in the Offer of

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Settlement, in accordance with the CAPP lettermemorializing the settlement attached to the Offer of Settlement.

In accordance with Rule 602(0 of the Commission’sRules of Practice and Procedure, 18 C.F.R § 385.602(f), any person desiring tocomment on this Offer of Settlement should file its comments with the FederalEnergy Regulatory Commission, 888 First Street, NE, Washington, DC 20426, nolater than 20 days after the date of filing of the Offer of Settlement (i.e.,by January 10, 2006). Reply comments will be due no later than 30 days afterthe date of filing of the Offer of Settlement (i.e., by January 20, 2006).Comments and reply comments must be filed on or before the dates specifiedherein. This filing is available for review at the Commission in the PublicReference Room or may be viewed on the Commission’s website at http:/www.ferc.govusing the “eLibrary” link. Enter the docket number excluding the last three digitsin the docket number field to access the document. For assistance, pleasecontact FERC Online Support at FERCOnlineSupport~fere.gov or toll-free at (866)208-3676, or for TrY, contact (202) 502-8659. Comments and reply comments maybe filed electronically via the Internet in lieu of paper, see 18 C.F.R. §385.2001(aX1Xiii) and the instructions on the Commission’s web site under the “e-Filing”link. The Commission strongly encourages electronic filings.

**CommentDate:                                    January10, 2006**

**ReplyComment Date:                         January20, 2006**

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**CERTIFICATE OF SERVICE**

I,John D. Clopper, certify that on December 21, 2005, I caused copies of the foregoingOffer of Settlement and attachments to be served on the Canadian Association ofPetroleum Producers and on all current shippers and tariff subscribers ofEnbridge Energy, Limited Partnership.
| Dated:  December 21, 2005 | /s/ John D. Clopper |   |
|-------------------------------------|---------------------|--------|
|                                | John D. Clopper     |

 

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